One of the more cherished benefits of owning a home is that you can deduct the mortgage interest from your home loan on your yearly income taxes. There was a slight change to this after the new tax laws were put into place, but the majority of homeowners will not be affected.
The new tax law
Under the old law, you would qualify for the mortgage interest deduction if you had a home loan of up to $1,000,000. The new tax laws only allow for a loan up to $750,000……which still covers the vast majority of homeowners. For people who currently have a loan over $750,000, they are grandfathered in under the old laws, so they are not affected by this new regulation.
In order to write off a portion of the mortgage interest, the loan has to be for your primary residence, 2nd home or a home equity loan.
The mortgage interest deduction can save you thousands of dollars towards your tax liability depending on the amount of your loan and interest rate. Besides other obvious benefits of owning a home, this is another reason why many renters decide to purchase a home instead of renting.
You can use this calculator to get a better idea of how much you could potentially save with this deduction.